Comment: How to boost profits by fixing your product data

British retailers and their suppliers have problems with product data. The vast majority of product data (80%) is inconsistent – either parts of it are missing or it’s unreliable. This means that 40% of invoices do not match with deliveries; causing delivery rejection, manual investigations, repeat journeys and wasted effort.

It is costing the entire industry in terms of cash, in terms of lost sales, and even in terms of the fees suppliers are currently paying for existing product data management. There are other costs too: delivery delays can do quick and lasting damage to a company’s reputation with customers, and these problems have been getting worse.

With the growth in online retail, data management is becoming even more important as the amount of data required per product grows. Consumers now demand much more information on the provenance of their goods and they want to be able to easily compare different brand versions of the same item.

These problems are particularly acute in the grocery sector were consumers need to be able to quickly find out if a product’s ingredients and nutritional information will fit with their dietary preferences. It may not seem too difficult for manufacturers to include this information on a single product, but contemplate the hundreds or even thousands of items some make, and it soon becomes a considerable and costly challenge. When you factor in the lack of agreed format and standardisation across the board, this creates a data minefield.

An affordable, effective solution to this data problem would have substantial benefits to both retailers and suppliers. To look for answers, GS1 UK, the supply chain standards organisation, have created a white paper on how suppliers can drive their profits by addressing problems with product data. The research reveals that while product data problems used to be a global phenomenon, suppliers and retailers in other countries have found solutions.

In Sweden, when supplier and retailers worked together to create a common platform to share data across the supply chain, their collaboration improved data quality, enabled faster exchanges of information, and reduced wasted activity. Suppliers using these data-sharing services were able to increase their sales figures by around 1-3%. Their cost of sales also decreased by 5%. This meant that a total financial benefit across the Swedish grocery market was equivalent to over £3bn.

Given the comparative size of the UK’s economy, this could represent a benefit of between £17bn and £21bn for the UK’s retail grocery industry if the country has a common platform to share high quality data across the supply chain.

The United States has also created better data management systems. In the US, they found that speed to shelf is was also improved, with some suppliers in the US seeing a 67% improvement in speed to shelf (from 4-8 weeks to 2 weeks). Poor data management was also costing suppliers in terms of transport operations. Using an improved data solution achieved 2-8% annual cost savings for American companies in terms of inbound and outbound operations.

While the benefits of better product data systems can be clearly seen in other countries, the research found these systems have, in many cases, proved prohibitively expensive to implement and wouldn’t work in the UK – despite their technical sophistication.

Follow the research, it’s clear that what is needed is a bespoke solution for the UK. As a result, GS1 UK are now managing a ground-breaking collaboration between suppliers and retailers, creating productDNA:hub – a revolutionary, universal format of high-quality, independently verified product data for the UK. The service will be managed on behalf of The Retail Grocery Advisory Board and will eradicate inconsistencies, create an industry standard and bring suppliers and retail00ers together to enjoy mutual benefits.

While productDNA:hub has been developed alongside FMCG giants such as Mondelez, Nestle, P&G and Unilever, it will have a more immediate benefits for small suppliers. When SMEs don’t have their own systems, productDNA:hub can be used to manage their product data.

To help set productDNA:hub apart from the existing platforms used to capture, manage, and publish digital content, approximately two-thirds of suppliers who subscribe will not pay for productDNA:hub in the first three years. Without the immediate fees attached, small suppliers stand to benefit the most.

The whitepaper’s research also looked at other intangible benefits of better data management including intellectual property. All of the suppliers that were interviewed as part of GS1 UK’s report said they would prefer to own the intellectual property of their product imagery and data. With any of the systems currently available they do not, but with the launch of productDNA:hub, they will.

The aim of productDNA:hub is to solve the retail sector’s problem with product data by allowing different parties to share the load of creating the new data management. This will create a fairer system which benefits suppliers, retailers and consumers. This is set to be the key to unlocking cost benefits across the whole industry and boosting profits for everyone by removing inefficiency.